Daniel Weintraub writing in the Sacramento Bee‘s Capitol Alert digs up an interesting analysis on the problems with taxing services:

Gov. Schwarzenegger says he is open to a discussion of extending the sales tax to services. That always seems like an attractive option. There are billions of dollars in potential tax revenue behind the proposal. But there also a ton of complications, and good arguments against it. For a summary of those, see this report by Dave Doerr at Cal-Tax. He wrote it five years ago, When Gray Davis said he was open to the idea.